What You Need To Know for September 12th

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Welcome back! Let’s get into it:

The Main Stories 🔍

August CPI came in slightly below expectations yesterday: 12-month CPI of 2.5% came in slightly below estimates of 2.6% while monthly growth of 0.2% was in line with expectations. Core inflation (excludes food and energy) rose 0.3% m/m though, 0.1% above the forecast. Some of the biggest areas of focus cooled in August, with Food up 0.1% in August (compared to +0.2% in July) and Energy deflating by -0.8% in August (vs. flatness in July). However, Housing accelerated in August up 0.5% vs. up 0.4% in July. A 25bps rate cut still seems on the cards for next week given the overall cooling inflation picture.

There was some big and breaking Investment Banking Analyst news from the WSJ: Bank of America and JP Morgan are working to curb investment banking analyst hours. This follows the tragic safety concerns from earlier this year. JPM will have a 80 hour/week cap (subject to exceptions such as a live deal) while BofA is revamping their timekeeping tracker. This story broke this evening, so more information is coming soon…

There’s some drama surrounding the purchase of Jeff Bezos’ latest Florida home: Last June, Bezos splashed $68mm on a pad in Miami Beach’s ultra-lux Indian Creek Village. Just a few months later, he doubled down, purchasing the 19k neighboring property for $79mm. In a newly filed suit, the seller of the second mansion claims he was misled by real-estate brokers at Douglas Elliman who concealed Bezos’ identity.

Apparently Elliman’s Florida CEO called Leo Kryss, the seller, to confirm that Bezos wasn’t the one buying the home. The brokerage also promised Kryss he wouldn’t see an offer above $79mm. Shortly after the Brazilian toy and electronics titan agreed to a 7.1% haircut (roughly $6mm) and sold to Bezos. Representing both Kryss and Bezos, Elliman pocked a cool $3mm commission on the transaction.

A Message from Semafor

There’s a money story in the Gulf. Take one look at the news, and you’ll see headlines about Saudi Arabia’s rapidly changing economy, Qatar’s investment in mass infrastructure, and the UAE’s transformation into a global tech hub. The geopolitical tectonic plates are shifting. 

To stay up to date on the business happening in the Gulf that is impacting the world around you, you need to check out Semafor Gulf.

It’s a must read for us.

Each issue uncovers the economic forces shaping the region — and the world. Get early access here — subscribe for free.

More Headlines 🍿 

• Polling from the first Presidential debate between President Trump and Vice President Harris showed a win for Vice President Harris

• Direct lenders are asking for “Pluralsight Protection” in new credit docs. This is in response to the LME battle earlier this year between Vista Equity’s Pluralsight and large direct lenders

• J. Crew is back in the leveraged finance market, years after inadvertently creating the “J. Crew Blocker” due to the Sponsor’s prior credit doc shenanigans. Within the $450mm loan, they’re offering a yield exceeding 11% to try to attract skeptical investors

• Wheel Pros (or Hoonigan), a Clearlake Capital backed firm, has filed for bankruptcy

• Raising Canes is in the leveraged loan market, and has tightened price talk on a $500mm loan following robust demand to S+200 @ 99.75 (instead of S+225-250 @ 99)

• Goldman Sachs will sell $3B of leveraged loans in a significant risk transfer (SRT). Deal terms are being discussed with several potential investors

• A Win for Wall Street Banks: Banking Regulators have cooled their Basel III rule proposal, now calling for a 9% rise in capital requirements vs. original plans of a 20% rise

• ICG raised a $16.8B European direct lending fund, their 5th vintage and smashing their last round of 8.1B Euros

• Goldman Sachs is testing leveraged loan demand for furniture e-commerce platform Wayfair

• PWC is eyeing 1,600 US layoffs (2.5% of their workforce). These are their first formal layoffs since 2009

• Activist investor Starboard is looking for News Corp to remove their dual-share structure

• Southwest Airlines chairman is set to retire, plus 6 board members are set to resign after a push from activist hedge fund Elliott

• Burger chain BurgerFi is filing for C-11 bankruptcy

• B. Riley is looking to sell assets to try to pay down debt

• Private equity firm GTCR is in talks to acquire German drug maker Stada for roughly $11B. Bain and Cinven are the current sponsors

• Billionaire Ken Griffin is helping the U.S. Men’s Soccer Team - the Citadel Billionaire is among those financing the salary of the new head coach Mauricio Pochettino

• Taylor Swift has endorsed Kamala Harris for President

Earnings Corner 📜 

Oracle (ORCL) reported earnings that beat estimates. Revenue of $13.31B was up 8% y/y (vs. $13.23B expected), and EPS was $1.39 (vs. $1.32 expected). Mgmt. projected Q2 revenue growth of 8% to 10% (vs. 9% expected) and EPS of $1.45 to $1.49 (vs. $1.47 expected), also announcing a new partnership with Amazon, which will allow customers to access Oracle database services on AWS infrastructure. The stock was up 13% the following Tuesday morning, hitting an all-time high.

Academy Sports and Outdoors (ASO) reported earnings that beat estimates, while missing on revenue. Revenue of $1.55B was down 2.2% y/y (vs. $1.58B expected), and EPS was $2.03 (vs. $2.02 expected). Mgt. attributed a 6.9% drop in comp sales to a weak economy, distribution challenges, and a severe hurricane season throughout the Southeast. Academy Sports lowered its FY outlook, projecting revenue of $5.895B to $6.075B (vs. $6.07B to $6.35B previously). The stock was up 2.5% the following Tuesday morning.

GameStop (GME) reported earnings that beat estimates, while missing on revenue. Revenue of $798.3MM was down 31% y/y (vs. $895.7MM expected), and adjusted EPS was $0.01 (vs. -$0.09 expected). The current analyst consensus estimates FY revenue of $4.13B and EPS of $0.08. The stock was down 12% at Wednesday’s close.

M&A Transactions💭 

Innovex International (NYS: INVX), designer, manufacturer, seller, and renter of mission critical engineered products, was acquired for $396.0M by Dril-Quip. Goldman Sachs advised on the sale.

ServiceTry has reached a definitive agreement to acquired 40% of The EV Hotel, operator of a hotel management agency, for $400.0M.

Methanex (TSE: MX) reached a definitive agreement to acquired The International Methanol Business Unit of OCI Global (AMS: OCI) for $2.05B.

Gebbs Healthcare Solutions, provider of healthcare BPO services, has entered into a definitive agreement to be acquired for $879.0M by EQT (STO: EQT). Avendus Capital and Jefferies advised on the sale.

Evans Bancorp (ASE: EVBN), a financial holding company, has reached a definitive agreement to be acquired for $236.0M by NBT Bancorp (NAS: NBTB). Piper Sandler advised on the sale.

American Megatrends International, provider of UEFI and remote management firmware, has entered into a definitive agreement to be acquired for $600.0M by Thomas H. Lee Partners. Bank of America and Deutsche Bank advised on the sale.

The US Finished Dosage Form Business of Xellia Pharmaceuticals was acquired for $135.0M by Hikma Pharmaceuticals (LON: HIK). The company will receive a contingent payout of $50.0M subject to the achievement of certain regulatory and commercial milestones. Leerink Partners advised on the sale.

The Spectator, operator of a weekly magazine company, was acquired for $130.54M by Marshall Wace. Robey Warshaw, Goldman Sachs, and The Raine Group advised on the sale.

Redwood software, developer of enterprise automation software, has entered into a definitive agreement to be acquired for $2.5B by Vista Equity Partners and Warburg Princus. Goldman Sachs advised on the sale.

Endeavor Energy Resources, provider of oil and gas drilling, was acquired for $26.0B by Diamond Energy (NAS: FANG). J.P. Morgan and Goldman Sachs advised on the sale.

The Operations in Guatemala of Cemex (MEX: CEMEXCPO) was acquired by Holcim Group (SWX: HOLN) for $200.0M. Bank of America advised on the sale.

Blink Fitness, operator of a chain of fitness gyms, has entered into a definitive agreement to be acquired for $105.0M by PureGym. Moelis & Company and Portage Point Partners advised on the sale.

Axcient, developer of business continuity and disaster recovery software, has entered into a definitive agreement to be acquired for $450.0M by ConnectWise.

Manawa Energy (NZE: MNW), New Zealand’s fifth-largest electric generator, has reached a definitive agreement to be acquired for $1.41B by Contact Energy (NZE: CEN). Lazard advised on the sale.

Private Placement Transactions💭 

SafetyCulture, developer of a workplace safety platform, raised $110.64M of venture funding led by Airtree Ventures at a pre-money valuation of $1.57B.

Finally, developer of bookkeeping software, raised $200.0M of Series B venture led by PeakSpan Capital.

Candid Therapeutics, operator of a biotechnology company, raised $370.0M of venture funding led by Venrock, TPG Crossover Management, Fairmount Partners, and venBio.

Glean, developer of search engine software, raised $260.0M of Series E venture funding led by Altimeter Capital Management and DST Global at a pre-money valuation of $4.25B.

Form3, developer of a cloud-based payment technology, raised $220.0M of Series C venture funding led by The Goldman Sachs Group at a pre-money valuation of $350.0M.

Pantera, operator of a biotech company, raised $148.37M of Series A venture funding led by LSP Management Group at a pre-money valuation of $199.03M.

Noteworthy Chart 🧭

Meme Cleanser 😆